The Emirates Economist

Thursday, July 28, 2011

Sad

Abdulkhaleq Abdulla, a professor of political science at U.A.E. University, said the Iranian issue was likely to have been a “small reason among many” that may have led to the closure of the Gulf Research Center in Dubai.

Although the center’s license was refused before the Arab Spring began, other experts point to the move possibly being part of a broader plan by the U.A.E. to quell challenges to its authority.

Recent signs of a clampdown include the ongoing trial in Abu Dhabi of five pro-democracy activists accused of undermining public order by seeking free elections.One of the defendants is Nasser bin Ghaith, a lecturer in international economic law at the Abu Dhabi branch of Paris-Sorbonne University.

...

Meanwhile, funding constraints at the Dubai School of Government are believed to have been the main reason behind the resignation of its dean, Tarik Yousef, and a number of other researchers. But a source at the school, who declined to be identified, also said there had been a crackdown on political debate, with some events falling off the organization’s conference agenda.

Mr. Abdulla, the political science professor at U.A.E. University, described the trial of the five activists as an “extreme measure in an extraordinary time,” adding that “as sad as it is, it is not necessarily representative of an emerging repressive trend in the U.A.E.”

Tuesday, July 19, 2011

Dubai's Arab Spring dividend

If Dubai is a business (it is, by the way), then the Arab Spring is paying dividends. Not in metaphorical political freedom dividends for its citizens, but in real dividends.

The ever-haunting question of the recession, “Who will live in all these flats and houses?” is being answered. It’s not the answer that the city planners or the real estate developers expected, but it is an answer: they are the emigrants resulting from the Arab Spring.

...

Many newcomers to Dubai, including those from the Arab Spring, have the intent to move here for two years, whether this is because their company has relocated them here for that long, or because that’s how long a visa lasts, or because that seems a ‘good’ number of years for which to try out something new and be away from their home-town. More often than not, though, these newcomers are in for a surprise when they find themselves here six or seven years later, and when their families consider Dubai ‘home.’ As a result of many cycles of this, and many families experiencing this, the permanency of Dubai has been established and it seems quite likely that those families currently escaping from the Arab Spring for a short while may end up in Dubai for a much longer time than they had originally anticipated, as many families before them.

Rights groups call for end of trail of activists charged with insulting officials

The call comes as the activists’ trial for “publicly insulting” the UAE president and other top officials re-opens on 18 July in Abu Dhabi's Federal Supreme Court, against the backdrop of a wider clampdown on dissent in the UAE.

...

"The UAE government is using defamation as a pretext to prosecute activists for peacefully expressing their beliefs about the way their country should be run," said Philip Luther, Amnesty International's Middle East and North Africa Deputy Director.

“We consider all five men prisoners of conscience and call on the UAE authorities to release them unconditionally.”

The five men have been detained since April, when the UAE Attorney General announced that they were in "preventive custody" for "instigation, breaking laws and perpetrating acts that pose a threat to state security, undermining the public order, opposing the government system, and insulting the president, the vice president and the crown prince of Abu Dhabi."

The Economics (and Accounting) of Al Qaeda in Iraq

... contrary to speculation that Al Qaeda in Iraq was reliant on international donations, this wasn’t a source of funding either. The group was self-financing. In fact, the core organization of Al Qaeda in Iraq in Anbar province was so profitable that it sent revenue to associates in other provinces of Iraq, and perhaps even further afield. The group raised millions of dollars annually through activities such as simple theft and resale of valuable items such as cars, generators, and electrical cable, and hijacking truckloads of goods, such as clothing. And their internal financial record-keeping was diligent, with all the requirements of expense accounts in regular businesses. A central unit of Al Qaeda in Iraq’s hierarchy required operatives to keep records of even the smallest outlay and to turn over their “take” to upper-level leaders, who made the spending decisions.

These carefully monitored expenses occurred in the context of what was literally a workforce. While people tend to think of Al Qaeda as simply a band of fighters, in reality there was a large organization needed to facilitate attacks and create support within the local community - all of which required money. As such, Al Qaeda in Iraq maintained an expanding payroll of members, imprisoned members, families of members, and dead members’ families, with ever fewer fighters and revenue producers. On the hook to provide for many local Iraqis, it had to resort to increasingly unpopular methods for generating revenue.

Beyond these daily expenditures, Al Qaeda in Iraq had big-ticket expenses. Launching attacks was one recurring overhead cost. An attack involved salaries for operatives, safe houses, transportation, weapons, and a crude form of life insurance for the wounded or for families of those killed. (By contrast, most civilian households in Anbar lacked any form of insurance.) Given these pressures, cash flowed fast in and out of Al Qaeda in Iraq’s central command in Anbar. About every two weeks, Al Qaeda doled out funds to pay not only for attacks, but also for housing, medical, and bureaucratic needs.

Wednesday, July 06, 2011

Abu Dhabi takes control

From what I can tell Abu Dhabi has tired of a game of chicken with Dubai over fuel prices. Since it essentially has an ownership stake in Dubai since the financial crisis it can evidently act unilaterally, taking over Dubai-owned gas stations that have stopped selling petrol.

The Gulf News reports details concerning the fuel price rules that fit conjectures I (and others) have made in the past.

Abu Dhabi: National oil company Adnoc is poised to take over the running of [Dubai-owned] Eppco and Enoc petrol stations in the northern emirates, Gulf News has learnt. They added that Adnoc has shown a high degree of interest in the matter and it will manage and run all the stations previously run by both companies.

Sources in the oil sector said that the UAE Government is moving to cancel licences owned by Eppco and Enoc in the northern emirates and allow the Abu Dhabi National Oil Company (Adnoc) to take over the running of the service stations.

Meanwhile, Eppco and Enoc are pressing the government to allow them to raise fuel prices, sources said. The two companies say that the cap on prices is leading to massive losses due to rising crude oil prices on world markets. Government sources said that both companies have released statements indicating their financial losses during the first half of 2011.

Emirates Petroleum Company (Emarat) was suffering similar losses until the UAE Cabinet increased the company's capital to about Dh9 billion at the end of last month.

They added that Eppco and Enoc have submitted reports to the Ministry of Finance and Industry recommending lifting the fuel price cap and letting the market decide what is a fair rate for fuel in the UAE.

The sentence, "Emirates Petroleum Company (Emarat) was suffering similar losses until the UAE Cabinet increased the company's capital to about Dh9 billion at the end of last month," makes no sense. You don't stop suffering losses by increasing capital. Presumably it's a bailout, a transfer from the UAE (read, Abu Dhabi) treasury to the Emarat (read, Dubai?).

Why Emarat is being treated differently from Enoc and Eppco is another question. I had assumed they were all Dubai-owned in one way or another.

I was always curious why Abu Dhabi/Adnoc allowed the second-movers (E-noc/ppco/marat) establish such a large market footprint across the country to begin with. Perhaps it was Dubai that made the error of believing that market share meant profit. It wouldn't be the only time Dubai made the bigger is better mistake.